Defined Contribution Benchmarking Survey · 2020-05-14 · Fro versigh articipan xperience lan ponsor r akin hei iduciar ol otch Appendix Teno logy, Media, and Telecommni cations

Defined Contribution Benchmarking SurveyAppendix 2017 Edition

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Defined Contribution Benchmarking SurveyFrom Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch

AppendixTechnology, Media, andTelecommunications

Public Sector12%

Professional Services9%

Manufacturing 17%

Consumer Business andTransportation12%

Energy andResources8%

Financial Services 22%

Health Care and Life Sciences12%

8%

Exhibit 1.1. Please indicate the primary nature of your business.

n=239

Exhibit 1.3. How many employees work for your company?

2013–2014 2015 2017

1–100 13% 8% 8%

101–500 23% 11% 12%

501–1000 9% 10% 10%

1001–5000 10% 31% 23%

5,001–10,000 22% 13% 10%

More than 10,000 23% 27% 37%

n=239

n=239

Exhibit 1.2. Please indicate the ownership structure of your company.

Publicly Held48%

Privately Held 52%

Exhibit 1.4. Please identify whether you are responding for a:

n=216

8%403(b) Plan

401(k) Plan92%

3


Exhibit 1.5. Please identify whether you are responding for a:

n=216

Exhibit 1.6. What are the total plan assets in your plan?

2013–2014 2015 2017Less than $5M 9% 7% 3%

$5M–10M 10% 4% 6%

$10M–25M 10% 8% 7%

$25M–50M 9% 8% 5%

$50M–100M 8% 9% 11%

$100M–500M 23% 27% 28%

$500M–1B 11% 13% 11%

$1B–5B 16% 18% 22%

More than $5B 3% 6% 7%

n=208

Nonunion Plan98%

Union Plan2%

4


Exhibit 1.7. Please indicate your primary provider for administrative services:

2013–2014 2015 2017ADP 1% 1% 1%American Funds Distributors, Inc. 0% 1% 1%

Aon Hewitt 5% 6% 3%Ascensus 0% 1% 0%Bank of America/Merrill Lynch 3% 3% 2%

BB&T 0% 0% 0%Ceridian 0% 0% 0%City National Bank 0% 0% 0%Charles Schwab & Co., Inc. 0% 3% 2%

Conduent (Xerox) 0% 0% 1%Deutsche Asset Management 0% 0% 0%

DST Retirement Solutions, LLC 0% 0% 1%

Empower Retirement 0% 5% 6%EPIC Advisors 0% 0% 1%Fidelity 25% 29% 30%GuideStone Financial Resources 0% 0% 0%

John Hancock 0% 1% 3%Lincoln Financial Group 0% 2% 1%MassMutual 0% 3% 1%Mercer HR Services 2% 1% 2%MetLife 0% 0% 0%MFS 0% 0% 0%

2013–2014 2015 2017Milliman 1% 1% 1%Nationwide 0% 0% 0%Newport Group 0% 0% 1%OneAmerica Financial Partners 0% 0% 0%

Oppenheimer 0% 0% 0%PayChex, Inc. 0% 0% 0%PNC Bank 5% 0% 1%Principal 3% 6% 4%Prudential 1% 1% 2%Securian 0% 0% 0%SEI 0% 0% 0%SunTrust 0% 1% 0%TD Bank 0% 0% 0%TIAA-CREF 1% 1% 1%T.Rowe Price 0% 6% 6%Transamerica Retirement Services 3% 1% 2%

UBS 0% 0% 0%Union Bank & Trust 0% 0% 0%VALIC Retirement 0% 1% 1%Vanguard 8% 12% 7%Voya Financial 0% 3% 7%Wells Fargo 3% 3% 7%In-house 1% 1% 1%Other 11% 7% 4%

n=202

5


Exhibit 1.8. Does your recordkeeper manage multiple employee benefit plans for your business (check all that apply)?

Exhibit 1.10. Do you use a common remitter service? Exhibit 1.11. Do you use a compliance coordinator service?

Exhibit 1.9. Do you use multiple recordkeepers for your defined contribution plan?

2017

Nonqualified Deferred Compensation Defined Contribution Plan(s) 42%

non-Employee Retirement Income Security Act of 1974 (ERISA) Covered Defined Contribution Plan(s) 7%

Qualified Defined Benefit Plan(s) 17%

Nonqualified Defined Benefit Plan(s) 9%

Health and Welfare Plan(s) 10%

No 46%

n=202

2013–2014 2015 2017

Yes, due to participant accounts with individual contracts with former recordkeepers, but single recordkeeper for current contributions

4% 16% 2%

Yes, due to participant accounts with illiquid assets 0% 0% 0%

Yes, because we chose to provide multiple recordkeeping options for employees

14% 8% 1%

Yes, other 0% 8% 1%

No 82% 68% 96%

n=201

Yes31%

No69%

Yes20%

No80%

n=16 n=15

6


Exhibit 1.12. As a plan sponsor, do you feel an obligation to prepare your employees for retirement?

2013–2014 2015 2017

We feel that our only responsibility is to offer a competitive retirement plan 21% 15% 16%

We feel that our responsibility includes taking an interest whether our employees are tracking towards a comfortable retirement (i.e., offering options that allow participants to plan for a reasonable retirement income replacement ratio)

62% 62% 60%

We feel very responsible to prepare our employees for retirement (e.g., taking a very involved approach such as monitoring utilization of financial planning tools, etc.)

17% 23% 24%

n=200

7


Exhibit 2.1. How confident are you that your organization understands its fiduciary responsibilities under the new DOL guidance?

Section B: Hot topics

n=198

Not confident 4%

Somewhat confident 37%

Unsure 2%

Very confident 57%

Exhibit 2.2. Which of the following areas have you reviewed with your recordkeeper and/or plan investment advisor(s) in response to the Department of Labor (DOL) guidance on fiduciary responsibility of retirement plan investment advisors published on April 8, 2016, in the federal register? (check all that apply)

2017Contracts for investment advice services 36%

Call center scripts 16%

Asset allocation and investment modeling 31%

Individual retirement account (IRA) rollover services and communications 23%

My recordkeeper will be an advice fiduciary under the new rules 31%

My recordkeeper will not be an advice fiduciary under the new rules 19%

Other 3%

Still under review 37%

None; do not anticipate impact 12%

n = 199

8


Exhibit 2.3. Which of the following approaches to communication targeting are used by your organization (check all that apply)?

2017Demographic-based 65%

Activity-based 54%

Behavior-based 45%

Other 11%

n=199

Exhibit 2.4. How are targeted communications being used (check all that apply)?

2017Encourage participants to increase savings rate/adopt step-up contribution feature 74%

Provide investment and financial market education 54%

Encourage participants to use recordkeeper tools 54%

Other 6%

n=199

Exhibit 2.5. What do you consider to be the most important financial wellness concern among your employees?

Paying down existing debt 16%

Other 3% Lack of emergency savings 13%

Lack of retirement readiness

Inability to meet monthly expenses15%

53%n=175

Exhibit 2.6. Which groups are being actively targeted (check all that apply)?

2017Baby Boomers 44%

Generation X 40%

Generation Y/Millennials 43%

Women 22%

Nonparticipants 58%

Participants who have recently reduced deferral percentages 12%

Participants who have recently increased deferral percentages 5%

Employees who are not contributing up to the match 61%

Other 12%

n=199

9


Exhibit 2.9. How are fees paid for financial wellness software?Exhibit 2.10. Which components of financial wellness tools and services are integrated with your Definted Contribution (DC) plan offering (check all that apply)?

2017Retirement planning (monitoring progress, exploring additional savings opportunities, Roth/traditional support, integration with social security/Medicare)

56%

Budgeting and expense projections 42%

Financial market education 38%

Debt management 35%

Education planning 35%

Income planning and tax strategies 31%

Benefit utilization and insurance planning 17%

n=48

n=34

Exhibit 2.8. Does your recordkeeper’s website integrate with broader financial wellness software (e.g., Mint, HelloWallet)?

n=199

Exhibit 2.7. What sort of behavioral finance approaches has your organization adopted to help participants plan for retirement (check all that apply)?

2017Enhanced or introduced "Auto-Pilot" solutions (e.g., automatic enrollment, step-up feature, managed accounts)

65%

Simplification of investment options 55%

Social norms/peer comparisons 9%

Investment reenrollment periods/forced investment assessments 5%

Delayed implementation of automatic enrollment features 4%

n=182

No additional fees 38%

Oneimplementation fees only 3% As a separate per

participant fees 15%

Included in administration fees 44%

time

Unsure 28%

Yes 20%

No 52%

10


Exhibit 2.11. For employees that are currently eligible to retire, what is the primary reason that they are delaying retirement?

2017Employee preference 19%

Need to keep health care coverage 16%

Have not saved enough for retirement 13%

Need to continue working to pay down debt or meet current expenses 8%

Supporting family members 2%

Lower investment value 0%

Unsure 38%

Other 4%

n=167

Exhibit 2.12. Do you use total participant or peer comparisons to encourage increased participant savings for retirement?

Exhibit 2.13. Do you allow participants to delay enrollment rather than opting out of automatic enrollment?

Yes, we show participants the average deferral rates/ contribution amounts for a defined peer group 12%

No, and not considering this approach 52%

Yes, we show participants the average deferral rates/contribution amounts for all plan participants

28%

No, but considering this approach

8%

Yes, we allow them to delay enrollment for a fixed period of time (e.g., three months)

Yes, we allow them to delay enrollment until reaching a specific milestone date

2% 2%

No62%

Not applicable34%

n=176

n=172

11


Increased by 5% or more27%

Increased by 2%–5% 21%

No substantial change (within +/–2% change)51%

Decreased by 2%–5% 1%

Decreased by 5% or more0%

Exhibit 2.15. How have enrollments in target date funds changed over the past two years?

Exhibit 2.16. Please provide the percentage of participant actions for the following post-terminated behaviors:

Rollover to another qualified retirement plan36%

Cash-out20%

Remain in plan41%

All others3%

n=164

n=75

Exhibit 2.14. Please indicate which of the following are integrated with retirement modeling tools offered by your recordkeeper: (check all that apply).

2017Outside participant accounts (e.g., savings, brokerage, IRAs) 46%

Deferred compensation plans 42%

Pension plans 35%

Retiree health plans 7%

None of the above 30%

n=182

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Section C—Eligibility and enrollmentExhibit 3.1. What is the primary reason that employees participate in your plan?

2013–2014 2015 2017Take advantage of company match 43% 35% 41%

Personal desire to save for retirement 39% 40% 31%

They were auto-enrolled and did not take action to opt out 13% 18% 19%

Proactive communications from your company and/or provider encouraging participation

2% 2% 2%

"Word of mouth"—their peers and supervisors participate 0% 1% 1%

Other 0% 1% 1%

Unsure 4% 3% 5%

n=218

Exhibit 3.2. What is the primary reason that employees do not participate in your plan?

2013–2014 2015 2017Lack of awareness or understanding 30% 34% 28%

Uncertain economy/job market 14% 12% 7%

Employees are saving elsewhere 3% 4% 4%

Lack of a company match 2% 2% 3%

Recent market performance has discouraged employees 2% 1% 1%

Other 20% 18% 18%

Unsure 29% 29% 39%

n=218

Exhibit 3.3. What are the service requirements for plan entry?

One Year 5%

Immediate66%

Zero to three months 24%

Four to six months 5%

n=218

13


Exhibit 3.4. Does your plan contain an automatic enrollment/negative election feature? (Defined as a feature that will automatically begin deducting contributions from participants as they become eligible unless the participant elects not to contribute.)

2013–2014 2015 2017Yes, satisfies safe harbor conditions defined by the Pension Protection Act of 2006

38% 40% 48%

Yes, does not satisfy the safe harbor conditions defined by the Pension Protection Act of 2006

11% 15% 14%

Yes, unsure of safe harbor conditions 6% 7% 5%

No, we have never had it 32% 28% 25%

No, we discontinued it 1% 0% 0%

No, but considering it 12% 10% 7%

No, we were unaware of this feature 0% 0% 1%

n=218

Exhibit 3.5. Does your plan contain a step-up contribution feature? (typically a feature whereby the participants’ deferrals are automatically increased each year)

2013–2014 2015 2017Yes, tied to the Automatic Enrollment feature 18% 28% 31%

Yes, as a separate, stand-alone feature 28% 34% 33%

No 41% 27% 27%



n=217

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Exhibit 3.6. What is the default investment election for automatic enrollment?

2013–2014 2015 2017Principal preservation (stable value, money market, etc.) 4% 2% 3%

Balanced fund 8% 6% 5%

Lifestyle fund (risk based) 6% 4% 2%

Lifecycle/target retirement date fund 72% 85% 85%

Managed account 7% 3% 2%

Retirement income product (annuity) 0% 0% 1%

Other 3% 0% 2%

n=116

Exhibit 3.8. What percentage of employees opt out/cancel automatic enrollment?

2013–2014 2015 20170%–5% 63% 68% 72%

6%–10% 17% 23% 24%

11%–25% 15% 9% 3%

More than 25% 5% 0% 1%

n=114

Exhibit 3.7. What is the default deferral percentage for automatic enrollment?

2013–2014 2015 2017

One percent N/A 3% 3%

Two percent (two percent or less for 2013–2014) 13% 5% 8%

Three percent 59% 47% 35%

Four percent 11% 14% 16%

Five percent 7% 8% 8%

Six percent 9% 22% 28%

Seven percent 1% 1% 2%

Eight percent 0% 0% 0%

Nine percent 0% 0% 0%

Ten percent or more 0% 0% 0%

n=116

15


Exhibit 3.10. What is the incremental step-up percentage applied each year?

Exhibit 3.11. What percentage of your participants is currently in the step-up contribution program?

2013–2014 2015 20170–10% 50% 52% 47%

11–25% 27% 27% 29%

26–50% 17% 14% 18%

More than 50% 6% 7% 6%

n=98

1%70%

2%3%

3% or more0%

Employee's choice27%

n=107

Exhibit 3.9. Does your plan contain a step-up contribution feature?

2013–2014 2015 2017Elective (participants must actively elect to enroll in the step-up program)

48% 43% 41%

Automatic for some or all participants (deferrals will automatically increase each year unless the participant elects out of the step-up feature)

52% 57% 59%

n=106

16


Section D—Employee contributionsExhibit 4.1. Based on the results of your most recent discrimination testing, what was the Average Deferral Percentage (ADP) of Highly Compensated Employee (HCEs) and Non-highly Compensated Employee (NHCEs)?

2013–2014 2015 2017HCE ADP 6.9% 7.0% 7.2%

NHCE ADP 5.2% 5.9% 6.0%

n=104

Exhibit 4.3. What is the current participant adoption rate of the Roth 401(k) feature?

Exhibit 4.2. Do you offer a Roth 401(k) feature?

More than 10%23%

6% to 10%27%

Less than 1%10%

1% to 5%40%

n=216

n=114

No, and not considering it 19%

Yes 70%

6%

No, but considering it within the next 12-24 months 5%No, but considering

it within the next 12months

17


Section E— Employer contributionsExhibit 5.1. Do you offer:

2013–2014 2015 2017Matching contributions on employee basic contributions only

37% 37% 36%

Matching contributions on employee basic and catch-up contributions

27% 26% 27%

Profit-sharing contributions only 6% 5% 4%

Both matching (employee basic only) and profit-sharing contributions

16% 12% 15%

Both matching (employee basic and catch-up contributions) and profit-sharing contributions

10% 14% 11%

None, we have suspended/discontinued company match 0% 1% 2%

None, we do not offer company match or profit-sharing contributions

4% 5% 5%

n=216

Exhibit 5.2. What service requirement must be met before employer matching contributions are made?

2013–2014 2015 2017None, employer matching contributions are made immediately upon participation in the plan

62% 71% 74%

Less than 1 year 10% 8% 4%

1 year 24% 19% 20%

Other 4% 2% 2%

n=205

18


Exhibit 5.3. Have you changed your company’s matching formula in the past year?

2015 2017Yes, increased match 6% 7%

Yes, decreased match 1% 1%

Yes, suspended match 0% 0%

Yes, reinstated match 0% 0%

Yes, instituted other formula/design changes 1% 2%

No, and we are not considering any changes 74% 82%

No, but we are considering changes 18% 8%

n=152

Exhibit 5.4. What is the plan’s vesting schedule for matching contributions?

2013–2014 2015 2017Immediate full vesting 32% 43% 43%

1–3 year cliff 22% 22% 22%

1–3 year graded 10% 5% 7%

4–6 year graded 30% 25% 22%

Other 6% 5% 6%

n=152

Exhibit 5.5. How often is the match calculated and deposited?

2013–2014 2015 2017Each pay period 82% 89% 89%

Monthly or quarterly (less frequently than each pay period) 7% 4% 4%

Annually (once a year), regardless of hours 3% 2% 2%

Annually (once a year), with a required number of hours, or employed on the last day of the year

8% 5% 5%

n=152

Exhibit 5.6. Do you true-up your employer match at the end of the year for employees who reach the maximum compensation limit or who hit the 401(k) limit before receiving the maximum possible match?

2013–2014 2015 2017Yes 52% 45% 54%

No 44% 46% 40%

No, unaware of this option 4% 3% 1%

Not applicable, match is calculated and deposited annually

52% 6% 5%

n=152

19


Exhibit 5.7. What are the service requirements for profit-sharing contributions?

2013–2014 2015 2017Immediate 24% 42% 40%

Less than 1 year 16% 7% 11%

1 year 40% 45% 38%

Other 19% 6% 11%

n=53

Exhibit 5.8. How is your profit-sharing contribution structured?

2013–2014 2015 2017Fixed 29% 36% 36%

Discretionary, this contribution was made this year

54% 51% 50%

Discretionary, this contribution was NOT made this year

10% 11% 10%

Combination 7% 2% 4%

n=52

Exhibit 5.9. Are there vesting requirements for these profit-sharing contributions?

n=53

Yes, there is a vesting schedule 77%

No, immediate full vesting23%

Exhibit 5.10. How is your match structured?

Fixed83%

Combination7%Discretionary, this

contribution was made this year10%

Discretionary, this contribution was NOT made this year0%

n=114

20


Exhibit 5.11. Do participants have the option to direct the investment of these matching contributions?

Exhibit 5.12. Do you make the matching contributions in employer stock or Employee Stock Ownership Plan ESOP?

Yes89%

No11%

Yes8%

No92%

n=74

n=152

Exhibit 5.13. What is the match formula used for the majority of participants in your plan?

2013–2014 2015 201725% of the first 6% of the employee's contribution 1% 3% 1%

50% of the first 6% of the employee's contribution 15% 18% 16%

100% of the first 3% of the employee's contribution N/A 3% 6%



100% of the first 6% of the employee's contribution 7% 12% 11%

100% of the first 3% of compensation and 50% of the next 2% of compensation without immediate vesting

1% 1% 2%

100% of the first 3% of compensation and 50% of the next 2% of compensation with immediate vesting (safe harbor)

8% 7% 9%

3% nondiscretionary contribution with immediate vesting (safe harbor)

1% 1% 1%

Other 67% 40% 38%

n=151

21


Section F—InvestmentsExhibit 6.1. Do you offer managed accounts? (allows employees to choose a professional manager for their 401(k) plan account where investment decisions are made and executed in line with their investment objectives and risk tolerance)

Exhibit 6.2. Why is financial counseling/investment advice not offered?

2013–2014 2015 2017Potential fiduciary liability 45% 48% 53%

Employees are not requesting this service 30% 30% 33%

Cost 41% 36% 25%

We are actively researching this feature and may implement in the future

25% 21% 22%

Simply not interested in offering in the DC plan 13% 10% 10%

We were unaware of this feature 0% 2% 2%

Other 7% 8% 4%

n=51

No 44%

No, but considering it 8%

No, unaware of this feature 3%

Yes 45%

n=160

22


Exhibit 6.4. What is the total number of investment options in your plan? (Note: When counting the number of investment options in your plan, please count all lifestyle and/or target retirement date funds as one option and count all funds in a mutual fund window/self-directed brokerage account as one option.)

2013–2014 2015 201720.8 22.3 19.4

n=160

Yes NoStable Value/GIC 76% 24%

Money Market 59% 41%

General/Core Bond 84% 16%

TIPS (Treasury Inflation Protected Securities) 32% 68%

High Yield Bond Fund/Treasury Bond Fund 59% 41%

Lifestyle Funds (risk-based) 19% 81%

Lifecycle/Target Date Funds (time-based) 89% 11%

Actively Managed Domestic Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend)

90% 10%

Passively Managed Domestic Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend)

88% 12%

Actively Managed Global/International Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend)

88% 12%

Passively Managed Global/International Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend)

77% 23%

Yes NoEmerging Markets 60% 40%

Socially Responsible 17% 83%

Real Estate 38% 62%

Sector Funds (e.g., Technology, Communications, Biotechnology, Health Care, and Utilities)

18% 82%

Hedge Funds 3% 97%

Employer Stock 28% 72%

Mutual Fund Window (Mutual Funds only) 16% 84%

Self-Directed Brokerage 35% 65%

Exchange Traded Funds 10% 90%

Yes NoIn-Plan Retirement Income Product (Annuity) 6% 94%

Custom/Hybrid Fund 7% 93%

n=148

Exhibit 6.3. Do you offer the following types of core investment options in your plan (check all that apply)?

23


Exhibit 6.8. What percentage of participants use the managed account service?

Less than 1% 7%

1% to 5%50%

6% to 10%28%

More than 10% 15%

n=56

Exhibit 6.7. What percentage of plan assets are invested in proprietary funds?

2013–2014 2015 20170%–25% 58% 52% 60%

26%–50% 18% 16% 15%

51%–75% 15% 17% 16%

76%–100% 9% 15% 9%

n=143

Exhibit 6.5. What is the overall average weighted expense ratio for your plan (excluding assets in Company Stock, Mutual fund and/or Brokerage Windows)?

2013–2014 2015 2017Up to 0.5% 29% 36% 40%

0.51% to 0.85% 32% 33% 34%

0.86% to 1.25% 11% 11% 8%

More than 1.25% 0% 0% 0%

Unsure 28% 20% 18%

n=149

Exhibit 6.6. Approximately how much of your fund line-up is made of proprietary funds (investment funds managed by your provider)?

2013–2014 2015 20170%–25% 58% 59% 64%

26%–50% 18% 18% 16%

51%–75% 15% 12% 10%

76%–100% 9% 11% 10%

n=153

24


Exhibit 6.11. Who currently provides financial counseling/investment advice to participants?

2013–2014 2015 2017Plan recordkeeper/investment manager 56% 64% 61%

Plan investment manager (if separate from recordkeeper)

12% 7% 14%

Independent provider 32% 26% 24%

In-house staff N/A 3% 1%

n=117

Exhibit 6.12. How is this financial counseling/investment advice delivered? (check all that apply)

2013–2014 2015 2017Online 75% 74% 69%

Over the phone 81% 81% 87%

Face-to-face 60% 52% 56%

n=117

Exhibit 6.10. Is individual financial counseling/investment advice available to participants?

2013–2014 2015 2017Yes, to all participants 57% 62% 67%

Yes, to some participants 5% 4% 4%

No, and we are not currently considering this feature

26% 24% 22%

No, but we are considering adding this feature within the next 12 months

5% 5% 5%

No, but we are considering adding this feature within the next 12–24 months

7% 5% 2%

n=159

Exhibit 6.9. Which types of investment vehicles are utilized in your plan? (check all that apply)

2013–2014 2015 2017Annuities 14% 9% 8%

Collective trust funds 39% 33% 42%

Mutual funds 89% 82% 84%

Separate accounts 24% 19% 20%

Other 7% 6% 4%

n=164

25


Exhibit 6.15. Have you considered adding an in-plan retirement income product (accumulation annuity) to your current plan?

2013–2014 2015 2017Yes, we are looking into it 10% 11% 11%

Yes, we have added this to the plan 4% 2% 2%

No, we are not considering at this time 71% 74% 79%

Unaware of this feature 15% 13% 8%

n=158

Exhibit 6.16. What is/was the biggest driver of your selection decision of a retirement income product (annuity)? (check all that apply)

2017Recommendation by advisor/consultant 37%

Organizational strength (high rating agency ratings) 32%

Crediting rates on the deferred annuity 21%

Only option offered by our provider(s) 11%

Name recognition 0%

Other 21%

n=19

Exhibit 6.13. Approximately what percentage of your participants use this service?

Exhibit 6.14. Who performs the investment monitoring for your plan? (check all that apply)

2013–2014 2015 2017An outside investment consultant 64% 65% 66%

Internal staff/team/committee 47% 48% 49%

Your plan provider/recordkeeper 35% 25% 24%

Other 1% 2% 2%

n=158

1% to 5%24%

6% to 10%24%

11% to 25%30%

2%

More than 25%

Less than 1%

20%

n=92

26


Exhibit 6.19. Why are you not considering adding an at-retirement income solution to your plan?

Exhibit 6.20. Are you considering any changes to your restrictions on company stock? (check all that apply)

2013–2014 2015 2017Eliminate or reduce restrictions on investment of company match 3% 4% 5%

Eliminate or reduce restrictions on diversification of company stock

3% 4% 0%

Eliminate future investments in company stock (investment elections on future contributions)

5% 14% 5%

Cap investment in company stock (current balance allocation) 3% 11% 18%

None/no restrictions remain 83% 67% 56%

Other 15% 7% 15%

n=39

Administrative complexity23%

Concerns about fiduciary liability23%

Communications difficulty

Lack of interest among participants24%

Lack of mobility2%

Other16%

6%

Cost6%

n=115

Exhibit 6.17. Why are you not considering adding an in-plan retirement income product to your plan?

Exhibit 6.18. Have you considered adding an at-retirement income solution (annuity purchase option and/or annuity selection software) to your current plan?

2013–2014 2015 2017Yes, we are looking into it 12% 14% 13%

Yes, we have added this to the plan 5% 5% 4%

No, we are not considering at this time 69% 72% 71%

Unaware of this feature 14% 9% 12%

n=157

Administrative complexity22%

Concerns about fiduciary liability27%

Communications difficulty

Cost5%

Lack of interest among participants25%

Lack of mobility1%

Other15%

5%n=127

27


Section G—FeesExhibit 7.1. How are your 401(k) plan’s recordkeeping and administration fees paid?

2015 2017No additional fees - all of the recordkeeping and administrative fees are paid through investment revenue (e.g., expense ratios or revenue-sharing arrangements that may be in place with the plan's investment funds)

50% 39%

There is a direct fee that is charged by the recordkeeper 41% 53%

There are additional fees in the form of a wrap fee or added basis point charge on the investments

9% 8%

n=157

Exhibit 7.2. How are the fees charged by your 401(k)/403(b) recordkeeper paid?

Exhibit 7.3. Which plan-level services/fees are paid for separately? (check all that apply)

2013–2014 2015 2017Communications 18% 28% 43%

5500 reporting 12% 40% 39%

Compliance/nondiscrimination testing

11% 37% 37%

Other 13% 15% 14%

None 46% 39% 30%

n=94

Exhibit 7.4. If your plan offers financial advice/counseling to your participants, who pays for this service? (check all that apply)

2013–2014 2015 2017Participants, via a per participant fee 12% 14% 11%

Participants, via an asset-based fee 24% 17% 21%

Plan sponsor 17% 17% 16%

There is no charge for this service 57% 58% 53%

n=109

Allocated to participants prorata based on account balances 15%

Allocated to participants based on an equal flat dollar amount 43%

25%

Paid directly by the company

Both the company and the participants pay this fee 17%

n=94

28


Exhibit 7.5. If your plan offers managed accounts to your participants, who pays for this service?

Exhibit 7.6. Please indicate whether you agree with the following statements:

Strongly Agree Agree

Neither Agree nor Disagree

Disagree Strongly Disagree

We have no difficulty obtaining a clear understanding of the total plan/participant administrative fees being charged 45% 43% 6% 3% 3%

We have no difficulty obtaining a clear explanation of the normal fund operating expenses of the funds in our plan 42% 44% 7% 4% 3%

We believe our fees are competitive 45% 44% 7% 1% 3%

We have no difficulty obtaining a clear description of all the revenue-sharing arrangements that our recordkeeper has with the mutual funds included in our plan

39% 41% 12% 5% 3%

We have no difficulty obtaining what it costs our provider to administer our plan 31% 39% 19% 7% 4%

We have performed a detailed fee analysis and have a thorough understanding of all plan expenses 41% 45% 9% 1% 4%

n=150

Plan sponsor7%

There is no charge for this service8%

Participants, via an asset-based fee85%

n=84

29


Exhibit 7.7. Do you have an ERISA account/fee credit as a result of revenue share collected in excess of plan administrative fees?

Exhibit 7.8. How do you use the fee credit resulting from revenue share?

2013–2014 2015 2017Fee credits are used to purchase additional services from our provider, such as communication materials and investment advice tools.

7% 8% 11%

Fee credits are used to pay for other plan expenses, such as plan audit fees, and consultant fees.

76% 66% 50%

Fee credits are used to allocate the credit back to participants (pro rata based on account balances)

17% 24% 35%

Fee credits are used to allocate the credit back to participants (equal dollar amount to all participants)

0% 2% 4%

n=54

No, there is no fee credit49%

Yes, there is a fee credit

Unsure16%

35% n=153

30


Section H—Administration capabilitiesExhibit 8.1. Does your primary provider support transaction processing via smartphone or other mobile device?

n=153

Exhibit 8.2. Does your plan offer participants the option to elect automatic fund rebalancing (a feature where the employee can elect a target allocation percentage among the fund offerings and the system will automatically initiate interfund transfers on a regular basis to achieve the target allocation)?

2013–2014 2015 2017

Yes 67% 72% 79%

No, unavailable 18% 13% 7%

No, uninterested 6% 4% 7%



n=153

Exhibit 8.3. Approximately what percentage of your participants uses this automatic fund rebalancing service?

More than 25%

11% to 25%4%

6% to 10%29%

1% to 5%39%

Less than 1%17%

11%

n=106

No, but planning on starting within the next 24 months 8%

Yes, only specific smartphone/mobile devices are supported 12%

No, not currently21%

Yes, all smartphone/-mobile devices are supported 59%

Exhibit 8.4. How many outstanding loans can a participant have at any time (considering both Primary Residence and General Purpose Loans)?

2013–2014 2015 2017

0 10% 8% 9%

1 46% 50% 42%

2 37% 35% 41%

3 or more 7% 7% 8%

n=152

31


Exhibit 8.5. Do participants receive retirement income projections illustrating anticipated annual income in retirement?

2013–2014 2015 2017Yes, provided online 48% 54% 66%

Yes via participant statements 10% 15% 11%

Yes via separate communication 15% 8% 5%

No, we are considering adding this feature in the next 12 months

6% 6% 3%

No, we are considering adding this feature in the next 12–24 months

6% 1% 1%

No, this feature is not offered by our vendor 9% 9% 5%

No, we are not considering adding this feature 6% 7% 9%

n=152

Exhibit 8.6. What data and/or functionality does your provider give you access to via a plan sponsor website (check all that apply)?

2013–2014 2015 2017Plan data 95% 96% 95%

Participant data 95% 95% 97%

Plan-level statement information 84% 89% 92%

Participant-level statement information 85% 89% 90%

View individual participant-level transactions 83% 85% 84%

Post payroll contribution/loan repayment files 69% 75% 76%

Post compliance information 63% 69% 66%

Process indicative data updates 51% 56% 62%

Investment performance 83% 82% 86%

Plan benchmarks 43% 52% 56%

Ad hoc queries and reports 75% 81% 82%

Payroll ACH funding 46% 51% 50%

Other 1% 1% 1%

n=153

32


Section I—Innovative tools Exhibit 9.2.: Have participants interacted with your recordkeeper through any of the following methods? (check all that apply)

2013–2014 2015 2017

Hand-held devices are used in group and individual meetings to allow immediate participant action (enrollment, investment changes, allocation changes, etc.)

8% 14% 25%

Participants use Social Media to interact with our recordkeeper (Facebook, LinkedIn, Twitter, etc.)

5% 4% 7%

Participants use instant chat via the recordkeeper's secure participant website

8% 13% 12%

Participants use smartphone and/or tablet applications to interact with our recordkeeper (via iPhone, iPad, Android, Blackberry, etc.)

31% 40% 48%

No 28% 20% 18%

Unsure 39% 38% 31%

n=153

Exhibit 9.1. Do you believe participants are interested in interacting with retirement providers via social media channels?

2013–2014 2015 2017

Yes, they are doing this now 8% 9% 15%

Not yet, but they will be in the near future 37% 21% 17%

No 23% 26% 18%

Unsure 32% 44% 50%

n=152

33


Section J—Provider relationship

2013–2014 2015 2017Less than 3 years 32% 28% 23%

3 years 22% 23% 33%

4 years 4% 5% 3%

5 years 13% 18% 20%

More than 5 years 29% 26% 21%

n=149

Exhibit 10.4. If you have made a change in recordkeepers in the last five years, please list the primary or most compelling reason for the change:

2013–2014 2015 2017Vendor consolidation 10% 9% 3%

A change in your organizational structure 0% 8% 3%

Local presence 0% 1% 0%

Quality of service representatives 10% 5% 6%

Quality of recordkeeping services 23% 27% 36%

Quality of investment choices 0% 4% 3%

Overall cost to plan 15% 14% 7%

Overall cost to participants 10% 5% 6%

Overall relationship 8% 11% 13%

Other 23% 16% 23%

n=31

Exhibit 10.2. What is the length of your current service agreement?

Exhibit 10.3. How long have you been with your recordkeeper?

2013–2014 2015 2017

Less than 2 years 10% 10% 3%

2–5 years 12% 18% 17%

5–10 years 33% 27% 27%

More than 10 years 45% 45% 53%

n=153

Exhibit 10.1. What is your plan recordkeeper structure?

2013–2014 2015 2017

Bundled (all services and funds coordinated through one vendor, investments may include multiple fund families)

71% 71% 69%

Alliance (services and funds provided by different vendors under an alliance agreement, with the coordination of trust, investment, and recordkeeping services handled by the primary vendor, not the plan sponsor)

8% 8% 9%

Unbundled (services and funds provided by unrelated vendors; plan sponsor plays a role in the coordination of trust, investment, and recordkeeping services)

21% 21% 22%

n=14

34


Exhibit 10.5. In general, how satisfied are you with the services provided by your recordkeeper?

2013–2014 2015 2017Very satisfied 47% 47% 53%

Satisfied 40% 44% 41%

Neither satisfied nor dissatisfied 9% 6% 4%

Dissatisfied 4% 3% 1%

Very dissatisfied 0% 0% 1%

n=151

Exhibit 10.6. How would you rate your current recordkeeper on the following?

1 2 3 4 5 N/AInvestment fund performance 1% 0% 7% 38% 26% 28%

Fees compared to marketplace 1% 0% 11% 45% 43% 0%

Fee disclosure 1% 0% 10% 39% 50% 0%

Administration/recordkeeping 1% 1% 11% 38% 49% 0%

Employee communication/education 1% 5% 19% 40% 34% 1%

Plan sponsor support and relationship management 1% 3% 8% 32% 55% 1%

Call center services 2% 2% 16% 47% 32% 1%

Voice response system 1% 2% 18% 41% 26% 12%

Plan website for participants 1% 2% 12% 44% 40% 1%

Plan website for sponsors 1% 5% 14% 40% 37% 3%

Compliance/regulatory 1% 2% 9% 41% 45% 2%

Consulting 1% 4% 20% 37% 29% 9%

Investment advice tools 1% 0% 24% 41% 28% 6%

Innovation 1% 3% 23% 46% 25% 2%

Overall 1% 1% 11% 48% 39% 0%

n=147

35


Exhibit 10.7. Select the top five changes/improvements that your recordkeeper could make in the order of importance, with 1 being the most important and 5 being the least important.

1 2 3 4 5Reduce direct fees to plan sponsor 13% 9% 10% 9% 8%

Offer investment options with lower fees and/or better performance 8% 3% 5% 3% 5%

Add/enhance plan sponsor website and tools 14% 15% 9% 16% 11%

Add/enhance participant website and tools 9% 14% 11% 9% 13%

Improve participant experience (enhanced website, expanded call center hours, targeted communications)

9% 11% 14% 14% 11%

Improve participant readiness for retirement 16% 13% 14% 9% 10%

Improve communications/participant education 15% 11% 7% 14% 13%

Products and services for other benefit programs (defined benefit, health and welfare, and nonqualified)

3% 6% 5% 5% 5%

Improve accuracy of information 1% 2% 4% 3% 2%

Improve turnaround times for reports and statements 2% 6% 5% 5% 4%

Improve relationship management and responsiveness to plan sponsor inquiries/issues 4% 2% 7% 3% 7%

Fee transparency 4% 6% 5% 3% 5%

Other 2% 2% 3% 4% 5%

n=149

36


Exhibit 10.9. If you have not changed recordkeepers in more than five years, please list the primary or most compelling reason you stay with the current vendor:

2013–2014 2015 2017Local presence 1% 3% 0%

Quality of service representatives 5% 3% 5%

Quality of recordkeeping services 19% 17% 20%

Quality of investment choices 5% 1% 1%

Overall cost to participants 2% 5% 13%

Overall cost to plan 6% 4% 2%

Overall relationship 32% 32% 30%

No compelling reason to change 26% 26% 24%

Other 4% 9% 5%

n=120

Exhibit 10.8. Which service levels are being measured? (check all that apply)

2013–2014 2015 2017Statement and report turnaround time 51% 43% 41%

Accuracy 63% 51% 54%

Loan, distribution, and withdrawal check processing time

50% 35% 42%

Participation rate 34% 26% 24%

Fund diversification at the participant level 25% 18% 18%

Call center statistics 58% 47% 50%

Other 12% 5% 3%

n=153

Exhibit 10.10. Does your recordkeeper agree to maintain specific levels of service or performance with the risk of sacrificing fees or providing additional services should these levels not be met?

2013–2014 2015 2017Yes 49% 49% 53%

No 31% 31% 30%

Don't know 20% 20% 17%

n=151

37


Section K—Plan effectivenessExhibit 11.1 Do you feel that your 401(k) plan is an effective recruiting tool?

Unsure 16%

No 10%

Yes 74%

n=153

Exhibit 11.2. Do you feel that your 401(k) plan assists in retaining your existing employees?

Unsure 20%

No 18% Yes

62%

n=146

Exhibit 11.3. Rank the following primary indicators of an effective 401(k) plan, with 1 being the most important and 5 being the least important.

1 2 3 4 5High level of participation 64% 14% 10% 7% 5%

Easy accessibility/technology 6% 11% 21% 27% 35%

Employee appreciation 8% 26% 14% 20% 32%

Cost-effectiveness 10% 18% 26% 29% 17%

Investment performance 12% 31% 28% 18% 11%

n=148

38


Exhibit 11.5. Do you feel there are any barriers to making your 401(k)/403(b) plan a more effective employee retention tool? (check all that apply)

2013–2014 2015 2017It is not a differentiator—all of our competitors have similar plans

74% 24% 30%

Participants do not have an adequate understanding of the benefits of our plan

13% 16% 18%

Our plan is not competitive (eligibility, match, profit-sharing, etc.)

3% 11% 12%

Other 10% 5% 1%

No barriers N/A 50% 47%

n=148

Exhibit 11.4. Do you feel there are any barriers to making your 401(k)/403(b) plan a more effective recruiting tool? (check all that apply)

2013–2014 2015 2017A 401(k)/403(b) plan is required just to do business in my industry 29% 16% 18%

Our plan does not provide a competitive level of benefits (eligibility period, match, vesting, profit-sharing, etc.)

19% 15% 17%

Most individuals do not understand how such a plan works

19% 11% 11%

Participants do not value this benefit 19% 11% 8%

Other 14% 6% 7%

No barriers N/A 50% 48%

n=148

39


Exhibit 11.6. What is the primary barrier to making your plan more effective? (Please check your top three barriers)

#1 #2 #3Ineffective employee communications 10% 7% 13%

Administrative costs 10% 3% 3%

Lack of employee understanding 18% 22% 13%

Lack of employee interest 11% 11% 11%

Employee demographics (age, salary, education level, language barrier, etc.) 20% 11% 22%

Low company matching formula/waiting period for matching contribution 8% 5% 5%

Waiting period for matching contribution 3% 3% 3%

Investment performance 1% 3% 1%

Employee turnover 5% 10% 13%

Current market/economic trends 7% 18% 11%

Lack of provider support/internal resources 5% 4% 4%

n=148

40


Exhibit 11.8. Have you conducted a retirement readiness assessment in the past 12 months to determine expected income replacement ratios for employees in retirement?

No, unaware of this 13%

No, not interested 13%

No, but considering 31%

Yes 35%

n=145

No. 1 No. 2 No. 3

Most employees are or will be financially prepared for retirement 12% 19% 19%

Some employees are or will be financially prepared for retirement 72% 67% 65%

Very few employees are or will be financially prepared for retirement 15% 13% 15%

Other 1% 1% 1%

n=144

Exhibit 11.7. In your opinion, are your employees saving adequately for retirement?

41


Exhibit 11.9. Please indicate whether you agree with the following statements:

Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly

DisagreeEmployees are well informed of plan features and investment options 18% 48% 23% 9% 2%

An employee education campaign, either through targeted communications or meetings, would be highly utilized and valuable to our employees

16% 47% 28% 7% 2%

Our recordkeeper/plan administrator offers valuable tools to educate employees on investment fundamentals and retirement readiness

26% 55% 14% 4% 1%

We utilize the latest communication methods (e.g., Social media, smartphone/tablet applications) to educate employees on retirement readiness

7% 25% 32% 32% 4%

n=142

Exhibit 11.10. Please indicate whether you feel the following will positively impact employee retiree readiness:

Not at all likely Not sure Somewhat likely

Enactment of the auto Individual retirement account (IRA) 31% 46% 23%

Expanding auto enrollment to cover all employees (not just new hires) 23% 11% 66%

Expanding auto step-up as the default option with auto enrollment 18% 11% 71%

Improving company match 16% 9% 75%

Enhancing participant communication/education strategy 11% 11% 78%

Simplifying investment choices 32% 21% 47%

n=136

42


Exhibit 11.11. If you have ever solicited or received feedback from your employees regarding aspects of the plan that they found to be confusing, please indicate those items here. (check all that apply)

2013–2014 2015 2017Where to invest/which funds to use 55% 40% 39%

How much to save for retirement 35% 30% 34%

Loans 21% 16% 24%

Company contributions 24% 20% 22%

Rollovers 18% 13% 20%

Withdrawals 24% 17% 19%

Vesting 11% 12% 16%

Impacts of contribution limitations/discrimination testing 13% 9% 14%

Enrollment 11% 9% 13%

Website 16% 16% 12%

Employee contributions 6% 5% 11%

Fees 10% 14% 11%

Financial planning tools 22% 17% 11%

Fund transfers/reallocations 13% 13% 9%

Participant statements/confirmation statements 6% 3% 7%

Conversion/blackout periods 5% 5% 4%

Voice Response System 2% 2% 4%

Forceout conditions 1% 2% 1%

Other 9% 3% 1%

Have never solicited/received feedback N/A 32% 27%

n=148

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Defined Contribution Benchmarking Survey · 2020-05-14 · Fro versigh articipan xperience lan ponsor r akin hei iduciar ol otch Appendix Teno logy, Media, and Telecommni cations